Nasdaq to create European central counter-party

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EUROPE – As part of its majority stake acquisition in Easdaq – the Brussels based pan-European stock exchange, US exchange Nasdaq says it is planning to establish a user-controlled European central counter-party (CCP), shaking up talks of a single continent wide system.

The arrangement is being made with the US clearing and settlement group, Depository Trust & Clearing Corporation (DTCC), which provides a similar platform for Nasdaq in the US.

The move comes at a time when other European exchanges are setting up their own central counter-parties. Deutsche Börse, according to a spokesperson, is planning the launch of its CCP before the end of the year.

This January, the central securities depositary of France, Sicovam, and Brussels based Euroclear Bank finalised their merger, creating the world’s largest clearance and settlement system for domestically and internationally traded bonds and equities. Estimates put their combined turnover, or the value of securities settled, at e95.5trn for the year 2000, a 15% rise from the year before. The value of securities held in custody by Euroclear Group exceeds e7trn.

In its recent report on European clearing and settlement, the European Commission’s committee of wise men, headed by Alexandre Lamfalussy, called for the private sector to deliver a pan-European system. Otherwise public authorities would have to take action, the committee reported.

The European Securities Forum (ESF), which represents 28 large worldwide investment institutions, also issued a blueprint for a continent-wide CCP last December, urging the existing organisations to co-operate. Talks have, however, faltered for some time due to the initial public offering (IPO) of Deutsche Börse, and Euronext’s planned IPO.

“Any change is often good from our perspective. A new player coming into the market does set the cat amongst the pigeons; it gets people talking and people worrying about their own positions. It may generate other activity and it may bring people to the table who weren’t at the table until now,” says Darren Fox at the ESF.

He adds: “ESF doesn’t have a particular view about trading platforms, we believe in diversity, so from our perspective the Nasdaq/Easdaq tie-up is completely neutral. The only slight disappointment is that there’ll be another CCP on the landscape, when perhaps they could have taken advantage of the existing service providers, but they’ve got their reasons if you ask them,” Fox adds.

Nasdaq Europe will be under the supervision of the Belgian Market Authority, the Belgian Banking and Finance Commission and the Belgian minister of finance.